Hawaii has the Twelfth Highest Tax Burden in the Nation for 2011

Dec 26, 2013

In Fiscal Year (FY) 2011, Hawaii collected $6.6 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average Hawaii taxpayer can afford this level of taxation.

As shown in the charts below, Hawaii’s state and local tax burden (tax collections divided by personal income) was the twelfth highest in the nation for FY 2011 at 11.2 percent—or 7.5 percent above the national average of 10.5 percent. Hawaii’s tax burden has barely grown over time at only 4 percent to 11.2 percent in FY 2011 from 10.8 percent in FY 1959 (the first year Hawaii was a state).

Hawaii’s high tax burden is driven by a very high sales tax burden (4.3 percent, 2nd highest), and a high all other tax burden (2.5 percent, 11th highest). This is offset by a lower than average property tax burden (2.3 percent, 43rd highest), individual income tax burden (2.1 percent, 30th highest), and corporate income tax burden (0.12 percent, 43rd highest).

This tax structure is not surprising given Hawaii’s reliance on tourism as its primary economic driver. A large sales tax burden would be “exported,” or paid by, tourists. As a result, the residents of Hawaii enjoy a lower than average property tax, individual income tax, and corporate income tax. Of course, exported or not, a high overall tax burden is still bad for the economy.

J. Scott Moody

Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.